Budget Act Alternatives

Since the middle of the last century, spending and debt in the United States have increased. The dramatic growth can be attributed to many factors, but the passage of the 1974 Budget Reform and Impoundment Control Act represents a key turning point in United States’ fiscal history. We contend that it is time for serious reconsideration of the complex system that has developed in the years since its adoption.

The Budget Act, which was passed after conflict arose between the Executive and the Legislature regarding the presidential power of impoundment, caused significant restructuring. The ability of the President to ignore congressional will by refusing to fund projects, programs, or reforms was restricted heavily. The resulting congressional budgeting process, however, has become increasingly complex.

Scholars have suggested that the 1974 Budget Act fundamentally changed the rules of the game to favor increased spending and a growing deficit. There is significant reason to believe this claim. Since the 1970s, the budget deficit has grown from about 1 percent of U.S. GDP to an average of 3.1 percent over the past three decades. Peaking in 2009 at nearly 10 percent, the deficit returned to a “relatively normal” 2.8 percent by 2014.

Consistent and responsible budgeting is almost unheard of in modern times. In the words of Heritage Foundation scholar Patrick Knudsen, “lawmakers no longer miss budget deadlines; they breach them deliberately and regularly.” Instead of attempting to balance the budget, lawmakers are caught in a system that favors stalemate and status quo. Instead of being able to attempt substantial budgetary reform or discipline, legislators often avoid money-saving reforms in favor of legislation that avoids total impasse.

The Institute for Spending Reform is currently conducting a groundbreaking two-part study. First, we will attempt to answer the question of whether, as the historical growth of the deficit and debt would suggest, the 1974 Budget Act has in fact contributed to increased spending. Second, we will study what workable alternatives exist for the current budgetary process.